Building more houses won't solve anything

This piece first appeared in last week’s Spectator.

Britain does not have a housing shortage. We have a problem with the cost not the availability of homes. This can’t be solved by building more houses, because it is not caused by an insufficiency of houses.

I’m no economist. My understanding of the dismal science is rudimentary. I may be shot down in flames as an ignoramus. But here goes. Residential property has become a kind of currency, prized more for value than utility; and its role as a financial asset is messing with its ability to perform the function of actually housing people. Straining to increase the supply of housing will no more restrain price than straining to increase gold production would make much difference to the price of gold. Supply being constrained, and appetite sharpened not by need but by acquisitiveness, even the most strenuous attempts to boost production will not bring prices within the reach of an increasingly large part of the population.